Charterhouse Development Capital (CDC) in October announced its GBP352 million (ecu 500 million) purchase of The Tussauds Group from Pearson plc.
The deal is the first transaction by Charterhouse Capital Partners VI, the GBP800 million fund CDC closed last year. It thus brings to an end a long fallow period for CDC, whose chief executive, Gordon Bonnyman, has made no secret of his view that many recent large buyouts in Europe have been over-priced. The price CDC paid for Tussauds represents a 1997 EBITDA (earnings before interest, tax, depreciation and amortisation) multiple of ten. Malcolm Offord, who led the deal for CDC, said “We paid a full price – for an excellent business”.
Besides the world-famous Madame Tussauds Wax Exhibition in London’s Baker Street, Tussauds operates attractions including the Planetarium (also in Baker Street), Rock Circus in Piccadilly Circus and Warwick Castle in Warwickshire.
Tussauds also operates outside the UK, with Madame Tussauds Wax Exhibitions in Amsterdam and Sydney and a further two under development in Las Vegas and New York.
The group also owns three UK theme parks – Alton Towers, Chessington World of Adventures and Thorpe Park, its most recent acquisition – and is thus the owner of three out of the top five ticketed visitor attractions in the UK. Together, Madame Tussauds, Alton Towers and Chessington World of Adventures drew 7.2 million visitors in 1997.
Tussauds’ ability to attract the crowds was underlined by the 40 initial expressions of interest Lazards received at the start of the sale process. Five serious potential purchasers ultimately emerged from this group – two US trade bidders, two US financial buyers and CDC – and the deal went to auction.
Charterhouse structured a funding package totalling GBP435 million, of which GBP195 million was in the form of equity. Malcolm Offord said that CDC may later sell down between GBP50 million and GBP75 million of the equity to investors in Charterhouse Capital Partners VI. The existing management team, led by chief executive Michael Jolly, will continue to manage Tussauds in partnership with CDC. The management team’s equity holding in the new company has not been disclosed, but Malcolm Offord described it as “normal for a buyout of this nature”.
Bankers Trust underwrote the debt component of the funding, which comprises conventional senior debt, together with a payment-in-kind (PIK) preferred element.
The widespread media attention this deal enjoyed might go some way to consoling CDC for the necessarily low-key revelation of its long-awaited German market debut, which followed closely on the heels of the Tussauds buyout.
CDC in November took a stake, alongside existing shareholders, in a leading German health and nutrition business. Some German transactions are still subject to draconian confidentiality agreements, and additional information on the deal was unavailable at press time. A CDC spokesperson declined to comment on the matter.